JUDGMENT H.L. Gokhale, J.
1. These appeals raise questions with respect to interpretation and application of a State Government Resolution following upon a policy note issued by the Central Government governing the setting up of new sugar co-operatives. The three Appeals, under letters patent, seek to challenge the common judgment and order dated 9th November, 2001 passed by a learned Single Judge dismissing the three writ petitions filed by the three appellants.
(i) The appellant in Letters Patent Appeal No. 280 of 2001 is the Chief Promoter of a Sugar Co-operative named as "Mahatma Basweshwar Sahakari Sakhar Karkhana Ltd. (Proposed)" which intends to set up a sugar factory at village Mal Kavatha, Taluka South Solapur of District Solapur. The appellant is a member of the Maharashtra Legislative Assembly. A writ petition bearing Writ Petition No. 4631 of 2001 was filed by him which is rejected by the above common order.
(ii) The appellant in Letters Patent Appeal No. 30 of 2002 is an existing Sugar Co-operative by name "Indira Sahakari Sakhar Karkhana Limited" which is situated at village Dahitane, Taluka Akkalkot, District Solapur and one Shri Sidramappa Malkappa Patil is the Chairman of this sugar factory. This Sugar Co-operative had filed Writ Petition No. 4762 of 2001 which is also rejected by the above order.
(iii) Letters Patent Appeal being LPA No. 42 of 2002 is filed by one Dilip S. Patil, who is the son of the above-referred Sidramappa Patil and who claims to be the Chief Promoter of a proposed Sugar Co-operative by name Shrishail Malilkarjun Sahakari Sakhar Karkhana Ltd. (Proposed) which intends to set up a sugar factory at village Tadwal, Taluka Akkalkot, District Solapur. This Dilip Patil had filed Writ Petition No. 5007 of 2001 and it is rejected by the same common order.
2. It is material to note that the above-referred Akkalkot and South Solapur Talukas are adjacent Talukas and these two Talukas along with one Omerga Taluka (which is a Taluka from the adjoining Osmanabad District) are now well irrigated on account of lift irrigation schemes known as "Ujni Lift Irrigation Scheme" and "Sina Irrigation Scheme". This has led to a good increase in the production of sugarcane in these areas. All these Sugar Co-operatives and their Promoters intend to set up one more Sugar Co-operative in the same area and their common competitor is the 3rd respondent in all the three appeals, one Shri Anandrao Narayanrao Deokate who is the Chief Promoter of a proposed Sugar Co-operative named as "Dakshin Solapur Shetkari Sahakari Sakhar Karkhana". The State of Maharashtra and the Commissioner of Sugar are the 1st and the 2nd respondents. The other concerned Sugar Co-operatives and/or their Chairmen are joined as the other respondents in these appeals. The grievance in these three appeals and in the writ petitions initially filed by the appellants was with respect to the order passed by the Commissioner of Sugar in favour of respondent No 3. This respondent No. 3 is a Minister in the present Government in the State of Maharashtra. Incidentally, the appellant in L.P.A. No. 280 of 2001 (Chief Promoter of Basweshwar Karkhana) and respondent No. 3 both belong to the same political party viz. Congress (I). For the sake of convenience, the three appellants in the three appeals are at times referred to as "Basweshwar Karkhana", "Indira Karkhana" and "Shrishail Karkhana" respectively.
3. It so happened that initially the Commissioner of Sugar by his order dated 22-5-2001, gave permission to the 3rd respondent to set up his Sugar Co-operative and to open a Bank Account for that purpose. That permission was challenged by Basweshwar Karkhana by filing Writ Petition No. 2534 2001 and the petition came to be allowed by the order passed by a learned Single Judge on 3rd July, 2001. The order passed by the learned Single Judge set aside the permission given to the 3rd respondent and directed a fresh hearing. The Commissioner of Sugar thereafter heard all the concerned parties once again and passed a speaking order on 21-9-2001 maintaining his earlier decision to grant the permission to respondent No. 3. It is this order dated 21-9-2001 which came to be challenged in the three writ petitions. These three writ petitions were heard by the learned Single Judge together and they came to be dismissed by the impugned order leading to the present three appeals under the Letters Patent. A Division Bench which initially heard these appeals for admission, directed that the appeals be posted for final disposal at the admission stage itself. The Division Bench, however, directed that the interim order passed by the learned Single Judge while disposing of the petition will continue until further orders. That order was modified by the Division Bench by its further order dated 12th December, 2001 and it permitted the 3rd respondent to invest in a Fixed Deposit the amounts already collected and which were credited by the 3rd respondent in the Solapur District Central Co-operative Bank, Kandalgaon Branch, Solapur. The Division Bench, however, specifically permitted day to day expenses including the amounts of salary to the staff and for conducting meetings, if any. A statement of the Counsel for respondent No. 3 was also recorded that thereafter no collection of funds would be made until disposal of the petition.
4. Mr. Oka and Mr. Sabrad have appeared for the appellant in L.P.A. No. 280 of 2001 i.e. Basweshwar Karkhana, Mr. Bhadrashete has appeared for the appellant in L.P.A. No. 30 of 2002 i.e. Indira Karkhana and Mr. Vineet Naik has appeared for the appellant in L.P.A. No. 42 of 2002 i.e. the Shrishail Karkhana. Mr. Aney and Dr. Chowdhary have appeared for the contesting respondent No. 3 and Mr. C.J. Sawant, Special Counsel has appeared for the State of Maharashtra and the Commissioner of Sugar.
5. It is necessary to note that the Commissioner of Sugar also functions as the Registrar of Co-operative Societies under the Maharashtra Co-operative Societies Act, 1960 (for short, "the M.C.S. Act") for the purposes of registration and functioning of the Sugar Co-operatives. The Registrar registers a Co-operative Society under section 9(1) of the M.C.S. Act. The general provision as to which societies may be registered is laid down in section 4 of this Act. Under the impugned order dated 21-9-2001, the Commissioner of Sugar had permitted the 3rd respondent to open a Bank Account in the name of the proposed Dakshin Solapur Shetkari Sahakari Sakhar Karkhana Ltd. to establish the said Sugar Co-operative Society. This order in favour of the 3rd respondent from amongst the different contenders is principally passed on the basis of the seniority in the matter of filing the application known as "Industrial Entrepreneur Memorandum" (for short, "I.E.M.") with the Secretariat of Industrial Assistance in the Ministry of Industry of the Central Government. The provisions with respect to the filing of this I.E.M. are reflected in the Press Note No. 12 dated 31-8-1998 issued by the General Government. When such a Memorandum is filed, an acknowledgment is issued by the Ministry and that date is relied upon to substantiate the claim of the particular Sugar Co-operative for Seniority on the basis of Clause 2 of the State Government Resolution dated 5th May, 1999 and all parties are in agreement that this is the date which is relevant for determining seniority of claims. Therefore, before we record and deal with the facts and legal submissions pressed into service by the rival parties, it is necessary to refer to sections 4 and 9(1) of the M.C.S. Act and the two policy documents which have a bearing on resolving this controversy. The first one is the Press Note 12 dated 31st August, 1998 issued by the Department of Industrial Policy and Promotion of the Central Government and the second one is the Resolution dated 5th May, 1999 passed by the Co-operation and Textile Department of the Government of Maharashtra.
6. Sections 4 and 9(1) of the M.C.S. Act read as follows:-
4. Societies which may be registered.---A society, which has as its objects the promotion of the economic interests or general welfare of its members, or of the public, in accordance with co-operative principles, or a society established with the object of facilitating the operations of any such society, may be registered under this Act.
Provided that, no society shall be registered if it is likely to be economically unsound, or the registration of which may have an adverse effect on development of the co-operative movement, or the registration of which may be contrary to the policy directives, which the State Government may, from time to time, issue.
9. Registration.---(1) If the Registrar is satisfied that a proposed society has complied with the provisions of this Act and the Rules, or any other law for the time being in force, or policy directives issued by the State Government under section 4 and that its proposed by-laws are not contrary to this Act or to the Rules, he shall, within two months, from the date of receipt of the application register the society and its by-laws.
7. For ready reference, it is better to refer to Press Note of the Central Government and the Resolution of the State Government in extenso. Press Note No. 12 dated 31st August, 1998 reads as under:-
"Government of India Ministry of Industry Department of Industrial Policy Ad Promotion Press Note No. 12 (1998 Series) Subject : De-licensing of Sugar Industry.
1. The Government has further reviewed the list of Industries retained under compulsory licensing and has decided to delete sugar industry from the list of industries requiring compulsory licensing under the provisions of the Industries (Development and Regulation) Act, 1961. However, in order to avoid unhealthy competition among sugar factories to procure sugarcane, a minimum distance of 15 KM. would continue to be observed between an existing sugar mill and a new mill by exercise of powers under the Sugarcane Control Order, 1966.
2. The entrepreneurs who wish to avail themselves of the de-licensing of sugar industry would be required to file an Industrial Entrepreneur Memoranda (I.E.M.) with the Secretariat of Industrial Assistant in the Ministry of Industry as laid down for all de-licensed industries in terms of the press Note dated 2nd August, 1991, as amended from time to time.
3. Entrepreneurs who have been issued Letter(s) of Intent (LOI) for manufacture of Sugar need not file an initial I.E.M. In such cases, the LOI holder shall only file Part 'B' of the I.E.M. at the time of commencement of commercial production against the LOI turned to them. It is however open to entrepreneurs to file an initial I.E.M. (in lieu to the LOI/Industrial Licence held by them) if they so desire, whenever any variation from the conditions and parameters stipulated in the LOI/Industrial Licence is contemplated.
Sd/-
Joint Secretary to the Government of India.
New Delhi, the 31st August, 1998."
8. State Government Resolution dated 5th May, 1999. The Resolution passed by the State Government on 5th May, 1999 in accordance with the said Press Note No. 12 is as follows:-
"True Translation From Marathi To English Deciding new sugar policy in respect of Co-operative Sugar Factory of the State as the Central Government has made Sugar policy permit free.
Government of Maharashtra Co-operative & Textile Department Government Resolution No. CSF 1799/6490/Case No. 145/138, Mantralay Extension, Mumbai 400032.
Date : 5th May 1999.
Read : 1. Government Resolution Co-operation & Textile Department No. CSF-1796/Case No. 26/13 S, dated 9-3-99.
2. Letter No. SC/Desk-3/C-2/1401/Policy dated 1-4-99 of the Sugar Commissioner, Pune.
Government Resolution :
In accordance with the Press Note 12 Sugar Industry has become Permit Free. As per the policy declared by the Central Government, Government has declared new Sugar Policy for keeping Co-operative Sector protected, vide Government Resolution No. CSF 1796/Case No. 26/13 S dated 9-3-99. In accordance with the said policy of the Government, Government has taken following decision, to protect the Co-operative Sector.
1. On receipt of I.E.M. from the Central Government while granting licence to the New Sugar Factory situated more than 15 km. air distance from the existing Sugar Factory, preference should be given to the factories from the Co-operative Sector and only thereafter factories from private sector should be considered.
2. On receipt of I.E.M. from the Central Government, while granting licence to the sugar factories, consideration should be given to the seniority of I.E.M. obtained by the factories of Co-operative Sector and seniority of I.E.M. obtained by the factories from the private sector.
3. On receipt of I.E.M. licence from the Central Government, there will not be necessity to obtain licence again from the Central Government.
4. While granting licence to the Sugar Factories who have obtained I.E.M. it should be observed that Directors of the Private Factories should have no relation and interest with the Co-operative Sugar Factories situated in that district or within the area of 20 kms. It means that Directors of the Private Sector Factories cannot hold the office of the Director of the Board of Directors of the Co-operative Sugar Factory.
On the name and by the Order of the Government of Maharashtra Sd/-
(C.K. Sankhe) Desk Officer, Government of Maharashtra, Co-operation & Textile Department.
9. Claims of Seniority by rival parties:-
Now, we turn to the claim of seniority of the rival parties. The factual position is as follows:-
(a) As far as the Basweshwar Karkhana is concerned, it is its case that on 28th February, 2000, a meeting was held by the farmers of its area to form a Sugar Factory and Mr. Chakote was selected as the Chief Promoter to set up the factory. An application for I.E.M. was made on 23rd March, 2000 and the same was lodged and the acknowledgment was received on 30th March, 2000. Three months later i.e. on 22nd June, 2000, he applied for amendment in the I.E.M. for shifting the place of the factory to village Malkavatha. The same was granted on 28th June, 2000. The amendment was granted in the following manner, namely, by adding on the original I.E.M. an amendment slip recording the change of place. On 19th October, 2000, he prepared a Project Report. However, his application was kept pending by the Commissioner of Sugar.
(b) As far as the 3rd respondent-Shri Anandrao N. Deokate is concerned, he entered into a Memorandum of Understanding (for short, MOU) with one Shri Pradeep Sarda on 23rd February, 2000 for converting Shri Sarda's I.E.M. dated 18-9-1998 for a private factory into a co-operative factory. On the basis of this MOU, Shri Deokate applied to the Central Government for necessary amendment of Shri Sarda's I.E.M. on 22-12-2000 and the amendment of Sarda's I.E.M. was granted in a similar fashion by the Ministry on 28-12-2000 by adding an amendment slip on the original I.E.M. that now it will be considered as I.E.M. for a co-operative.
(c) As far as Shrishail Karkhana is concerned, it has obtained the I.E.M. on 23rd March, 2000. Thereafter its Chief Promoter made an application to the Commissioner of Sugar on 15th January, 2001 and it was kept pending.
(d) As far as the Indira Karkhana is concerned, it is the main grievance of this appellant in its appeal that some 24th villages listed at Exhibit A to its writ petition falling in the area of operation of this Co-operative, (which provide nearly 40% of its sugarcane) are claimed for coverage in the area of operation of respondent No. 3 and that would affect the functioning of the Indira Karkhana seriously, which is a factor to be considered by the Registrar under section 4 of the M.C.S. Act.
10. In this connection, it is necessary to refer to the acknowledgment of I.E.M. given earlier to Shri Sarda and the amendment thereof effected for respondent No. 3. The acknowledgment receipt issued to Shri Sarda was dated 18-9-1998 bearing No. 1710/SIA/IMO/98. At the bottom of this acknowledgment receipt, it was mentioned as follows :-
"This acknowledgment is subject to the provisions of Press Note No. 6 dated 29th July, 1993, Press Note No. 17 dated 28th November, 1997 and Press Note No. 12 dated 31st August, 1998 regarding the significance, implications and legal status of filing of Industrial Entrepreneur Memorandum."
Now, when the 3rd respondent applied for amendment of this acknowledgment, he was issued a letter dated 28-12-2000. Its relevant portion is as follows :-
"No. 1710/STA/IMO/1998 Government of India Ministry of Industry Department of Industrial Policy & Promotion Secretariat of Industrial Assistance (Entrepreneur Assistance Unit) New Delhi 28-12-2000 To, Dakshin Solapur Shetkari Sahakari S.K. Ltd., 18, Vikas Centre, S.V. Road, Santacruz (W), Mumbai 400 054, MAHARASHTRA.
Subject : I.E.M. application of Dakshin Solapur Shetkari Sahkari S.K. Ltd. for the manufacture of Cane Crystal Sugar.
Reference : This Ministry's I.E.M. Acknowledgment No. 1710/STA/IMO/1993 dated 18-9-1998 Dear Sirs, I am directed to refer to your letter(s) No. NIL dated 22-12-2000 on the above mentioned subject and to say that the following corrections/modifications/amendments are made in the Ministry's I.E.M. Acknowledgement No. 1710/STA/IMO/1998 dated 18-9-1998.
Existing Amended
1. Name of the Company Pradeep Kumar Sarda Dakshin Solapur Shetkari Sahakari S.K. LTD.
Registered Address 18, Vikas Centre 18, Vikas Centre S.V. Road, S.V. Road, Santacruz (W), Santacruz (W), Mumbai-400 054 Mumbai-400 054.
MAHARASHTRA MAHARASHTRA B. NIC Codes/ ..............
Items of ..............
Manufacture ...............
...............
................
................
..............
..............
.............
Proposed Capacity 1. 61500.000 M. TON 1. 200000.000 M. TONS 0.000 M. TON
2. 25200.000 M. TON 2. 8000.000 M. TONS 0.000 M. TON
3. 44800.000 M. TON 3. 8000.000 M. TONS 0.000 M. TON Proposed Investment Rs. 3800000000.00 Existing Investment Rs. 0.00 Location Kandalgaon South Solapur Solapur (Sholapur) MAHARASHTRA Miscellaneous (any other) This may be kept attached with the original Acknowledgment No. 1710/SIA/IMO/1998 dated 19-9-1998.
The receipt of this letter may please be acknowledged.
Yours faithfully, Sd/-
(T.O. SHARMA) Under Secretary to the Government of India."
Similar is the method adopted when the Basweshwar Karkhana was issued the I.E.M. initially on 30th March, 2000 for setting up of the factory of village Boramani and subsequently when the change of location to village Malkavatha was effected on 28th June, 2000 by amending the I.E.M. initially issued.
11. It will be seen from the impugned order passed by the Commissioner of Sugar that he has come to the following conclusion:-
(i) Inasmuch as serial number of the I.E.M. issued to Shri Sarda is retained and continued when the amendment was granted in favour of respondent No. 3, the 3rd respondent will have to be considered as having an I.E.M. from the date when it was originally granted to Shri Sarda i.e. on 18-9-1998. This amended I.E.M. in favour of respondent No. 3 will, therefore, have a superior seniority position as compared to others.
(ii) Except the proposed factory of the Basweshwar Karkhana, all other factories are beyond the distance of 15 km. from the proposed factory of respondent No. 3.
(iii) That sufficient sugarcane is available in the proposed area of operation of respondent No. 3 Karkhana to justify this new factory of 1250 T.P.D.
(iv) Respondent No. 3 has proved economic soundness by collecting Rs. 1.24 crores share capital within a short span of time. Under section 4 of the M.C.S. Act, the objects of the proposed Society have to be promotion of economic interests or general welfare of its members and to promote co-operative movement. Respondent No. 3 had satisfied this requirement. All other sugar factories were colluding so as to oppose the factory of respondent No. 3. The Chief Promoter of the Shrishail Karkhana is the son of the Chairman of the Indira Karkhana. In fact, he presided over the first meeting of the proposed Shrishail Karkhana. Considering all these factors, the factory proposed by the 3rd respondent is more viable.
Therefore, the Commissioner of Sugar granted permission to respondent No. 3 to open a Bank Account.
12. When the matter was carried in a writ petition before a learned Single Judge, it was canvassed on behalf of the appellants that the order passed by the Commissioner of Sugar was a fallacious one. It was firstly submitted that a I.E.M. of a private factory cannot be transferred to a Co-operative Factory. Secondly, it was submitted that even if it is transferred, it cannot be said to have retrospective effect and thirdly, that there were overlapping areas and the proposed factory was within 15 km. from an existing factory viz. Indira Karkhana whose 24 villages were being claimed in the proposed area of operation of the 3rd respondent-Karkhana.
13. The learned Single Judge negatived these arguments. With respect to the first two submissions on transfer of I.E.M., in paragraph 16 of the judgment, the learned Judge observed that admittedly a number of I.E.Ms. have been allowed to be amended on various aspects and, therefore, there was no substance in the contention that the I.E.M. could never be amended or could never be transferred. In paragraph 12 of the judgment, the learned Judge held that if such transfers or amendments were prohibited then the Central Government obviously would not have granted the amendment in favour of respondent No. 3 from the private sector to a co-operative sector. Thereafter he referred to the manner in which the amendment was effected by affixing the amendment slip on the original I.E.M. and observed at the end of paragraph 12 that "The above document abundantly makes it clear that the date of I.E.M. never gets changed even though the same may be amended any number of times." Therefore, in paragraph 13, the learned Judge held that the I.E.M. of respondent No. 3 was prior in point of time and one cannot find any perversity or fault with the order of the Commissioner of Sugar granting the permission to respondent No. 3.
14. With respect to the third submission that 24 villages were being overlapped, the learned Judge observed in paragraph 15 that no evidence was produced before the learned Commissioner of Sugar that the Indira Sahakari Sakhar Karkhana Ltd. will suffer by grant of permission even if there was any such overlapping. He however recorded a statement of Mr. Sawant, Special Counsel appearing for the Government and the Commissioner of Sugar, that the members of Indira Karkhana from these 24 villages will be permitted to supply their sugar to the Indira Karkhana though they are from the concerned 24 villages and which will now be included in the area of operation of respondent No. 3.
15. Mr. Oka, learned Counsel appearing for the Basweshwar Karkhana, submitted that the learned Single Judge has failed to notice the nature of the main dispute. What we were concerned with was the question as to whether by such an amendment in the I.E.M. for a private factory one can claim seniority for the purposes of a co-operative factory. He laid emphasis on the fact that the State Governments Resolution (GR) of 5th May, 1999 was issued for protecting co-operative sector. In Clause 4 of the GR, it was made clear that the Directors of Private Factories should have no relation and interest with the Co-operative Sugar Factories situated in that district within certain area. Besides, in Clause 2, it was stated that consideration should be given to the seniority of I.E.M. obtained by the factories of Co-operative Sectors and seniority of I.E.M. obtained by the factories from the Private Sectors. In the preamble of this GR, it was specifically stated that the decisions therein were taken to protect the co-operative sectors. In his submission, the entire rationale behind the GR was to encourage the co-operative movement. The appellant in LPA No. 280 of 2001 (Basweshwar Karkhana) had taken steps to form a co-operative by organizing the farmers in February 2000 and holding their meeting. Thereafter, an application was made for I.E.M. and it was granted on 30th March, 2000. As far as the 3rd respondent is concerned, he entered into a MOU with one Pradeep Sarda on 23-2-2000. That Memorandum was entered into individually between Shri Deokate, the Chief Promoter of the Dakshin Solapur Karkhana and one Mr. Sarda a holder of an I.E.M. for a private factory and on the strength of that MOU, the I.E.M. of Shri Sarda was amended on 28-12-2000. The submission of Mr. Oka, therefore, was that the I.E.M. of the 3rd respondent could not be said to be effective on any date prior to 28-12-2000.
16. Mr. Vineet Naik, learned Counsel appearing for the appellant in LPA No. 42 of 2002 (Shrishail Karkhana), supported this submission, but pointed out that as far as the I.E.M. or Shrishail Karkhana is concerned, it was prior to that of Basweshwar Karkhana viz. that it was issued on 23rd March, 2000. He, therefore, submitted that if the seniority of I.E.M. was the only factor to be considered, then his client had the earliest I.E.M.
17. Mr. Sawant, learned Special Counsel appearing for the State Government, defended the order of the Commissioner of Sugar and that of the learned Single Judge and submitted that when the serial number of a document remained the same after its amendment, the amended document will have to be construed as the original document bearing the same serial number. The amendment will have to be considered as retrospective and, therefore, there was no error in the order of the Commissioner of Sugar and that of the learned Single Judge. He further submitted that both the orders ought to be maintained and all the three L.P.As. should be dismissed.
18. Mr. Bhadrashete, learned Counsel appearing for the appellant-Indira Sakhar Karkhana in LPA No. 30 of 2002, submitted that the 24 villages were within the radius of 15 km. and they ought to be excluded in any case from the coverage of respondent No. 3s proposed sugar factory. These villages contributed to the extent of 40% of its sugarcane requirement and he pointed out from the record of the proceedings that this aspect was clearly placed before the Commissioner of Sugar as to how his client will suffer, if these villages were permitted to be overlapped. He further pointed out that in the Central Government Press Note also it was made clear that distance of 15 km. will have to be observed between the existing Sugar Factory and a proposed factory.
19. Mr. Aney, learned Counsel appearing for respondent No. 3, adopted the arguments of Mr. Sawant. He, however, stated, on instructions, that respondent No. 3 was ready to delete those 24 villages from the area of operation of respondent No. 3s' Co-operative Society.
20. Conclusions :
To appreciate the rival submissions, it is necessary to consider the purpose for which the State Government Resolution dated 5th May, 1999 was issued. The GR clearly states in its preamble that the decisions therein were taken to protect the Co-operative Sector. In Clause 2 thereof, it was clearly stated that the consideration should be given to the seniority of I.E.M. obtained by the factories of Co-operative Sector and seniority of I.E.M. obtained by the factories from the private sector. Now, what is to be noted is that as far as the appellant in L.P.A. No. 280 of 2001 (Chief Promoter of Basweshwar Karkhana) is concerned, he was elected as the Chief Promoter on 28th February, 2000 and applied for the acknowledgment on 23rd March, 2000 and it was issued on 30th March, 2000. The site of the factory was changed and was recorded in the amended effected on 19th June, 2000. The proposed Sugar Co-operative however remained the same. Question is whether this amendment can take away the seniority of this factory on the basis of its original I.E.M. issued on 30th March, 2000. In the case of respondent No. 3, however, he moved into the matter only when a M.O.U. was signed between one Pradeep Sarda and the 3rd respondent on 23rd February, 2000. The application for amendment of the I.E.M. was also moved as late as on 22nd December, 2000. The question is whether the 3rd respondent can claim seniority over the Basweshwar Karkhana by claiming that the amendment of Mr. Sarda's I.E.M. will relate back. As stated in Clause 2 of the State Government Resolution, the authority has to consider the seniority of I.E.M. obtained by the Co-operative Sugar Factories. This amendment of the I.E.M. in favour of respondent No. 3 was effected on 28-12-2000.
21. (i) As far as transfer of a private sector I.E.M. to a co-operative sector is concerned, one cannot have much grievance about that if the Central Government is permitting such transfers. The first objection of the appellants on that ground therefore cannot stand. However, as far as the second issue of claiming the seniority based on the amendment to I.E.M. is concerned, it has to be looked at from a purposive point of view. If any such amendment is permitted to have a retrospective effect, such construction will permit some promoters of co-operatives to buy the I.E.M. of a private factory and to claim seniority over those who are organizing farmer-members into a co-operative and spending time on that. A genuine co-operative effort for a sugar factory requires a large number of people coming together for such purpose. They have to be explained the proposal to bring them together. It requires a good deal of effort and time. The reasoning of the Commissioner of Sugar as also of the learned Single Judge, therefore, in that behalf are fallacious and will have to be interfered with. The learned Commissioner of Sugar has completely erred in laying emphasis on the fact that the serial number of the original I.E.M. is continued on the amended I.E.M.. That cannot be the relevant factor for considering the seniority as per Clause 2 of the State Government Resolution. One cannot lose sight of the fact that the amendment is effected much later. Merely because the I.E.M. retains the same serial number, the benefit of the amended I.E.M. cannot be retrospective. It will have to be from the date the amendment was effected. An amendment of I.E.M. taking the factory from private to co-operative sector cannot be retrospective.
(ii) The amendment to the I.E.M. of Basweshwar Karkhana is however of a different type. It is only with respect to the change of site but the character of the entity remains the same viz. co-operative and its promoters are also same. Therefore, Basweshwar Karkhana cannot be denied claim to its seniority position on the basis of seniority of its initial I.E.M. In the case of respondent No. 3 however it is an amendment of I.E.M. of Mr. Sarda due to the purchase of the I.E.M. by a co-operative. As far as the proposed co-operative of respondent No. 3 is concerned it got its I.E.M. only on that date. Permitting it to make a retrospective claim of seniority only because the serial number of the I.E.M. continues to be the same will mean jumping the queue. Any such interpretation will be contrary to the letter and spirit of the above G.R. and will also be violative of Article 14 of the Constitution of India. The serial number of the I.E.M. of respondent No. 3 may continue to be the same since the Central Government is maintaining its record that way, but when it comes to claiming the benefit of the State G.R. for the purposes of seniority, it can be available to respondent No. 3 only from the date, the I.E.M. was amended to incorporate its name thereon. Any other interpretation and application of the G.R. to the factual situation is impermissible.
(iii) It is however another matter on facts that even if the claim of seniority of Basweshwar Karkhana is considered from 28-6-2000, (the date on which its I.E.M. was amended in view of the change of site of factory) it will still be eligible to claim seniority over respondent No. 3 since its name was entered into Mr. Sarda's I.E.M. only on 28-12-2000.
22. Mr. Naik appearing for Shrishail Karkhana had pointed out that it had an I.E.M. issued on 23rd March, 2000 and it was prior to that of Basweshwar Karkhana which was issued its I.E.M. on 30th March, 2000. On this issue, however, we are in agreement with the reasoning of the Commissioner of Sugar that I.E.M. of Shrishail Karkhana is of no consequence inasmuch as it is almost for a second Sugar Co-operative sought to be set up by Indira Sahakari Sakhar Karkhana. The Promoter of Basweshwar Karkhana is the son of the Chairman of Indira Sahkari Sakhar Karkhana Ltd. It is, in fact, the Chairman of the Indira Sahkari Sakhari Karkhana Ltd., who has presided over the meeting to form this Shrishail Co-operative. As per Clause 4 of the above G.R. a director of a private factory cannot hold the office of a director of a sugar co-operative nor can have interest therein. The idea is to prevent a back-door entry and capture of a co-operative by private companies and individuals. The same principle will have to be read in Clause 4 of the G.R. for Co-operatives. In the case of Shrishail Karkhana what is being done is that a son is being put up as a front to set up another factory which will be under the control of same person i.e. the father. This is impermissible. The view taken by us is also in consonance with Directive Principle 39(b) of the Constitution which requires the State policy to see to it that the ownership and control of the material resources of the community are so distributed as best to sub-serve the common good. That is also the spirit behind section 4 of the M.C.S. Act referred to earlier.
23. The other reasoning of the Commissioner of Sugar is erroneous where he holds that respondent No. 3 has proved his economic soundness by collecting Rs. 1.24 Crores share capital within a short span of time. It is to be noted that respondent No. 3, who is the Chief Promoter, is a Minister in the present State Government and he was permitted to open a Bank Account, whereas the others were not. On this point alone, one cannot come to the conclusion that his proposal is more viable.
24. There is an allegation of mala fides in all the three appeals since the 3rd respondent is a Minister in the present State Government. However, except for the fact that he is a Minister, there is no material produced that the impugned order is passed because he is a Minister or because of the influence exerted by him as a Minister. In the absence of any such material, we cannot come to a conclusion that the impugned decision of the Commissioner of Sugar was mala fide though as stated above it suffers from other defects.
25. Thus, we hold that the impugned decision of the Sugar Commissioner dated 21-9-2001 is contrary to the principles laid down in the above G.R. and is perverse and is required to be set aside. The impugned decision of the learned Single Judge approving this decision suffers from an error of law and is required to be interfered with.
26. For the reasons stated above, we allow all these appeals and set aside the order dated 9th November, 2001 passed by the learned Single judge as also the order dated 21st September, 2001 passed by the Commissioner of Sugar. We hold that the appellant in L.P.A. No. 280 of 2001 i.e. Basweshwar Karkhana will be eligible to claim seniority on the basis of his I.E.M. dated 30th March, 2000 over the I.E.M. of respondent No. 3, which cannot relate back prior to the amendment effected on 28th December, 2000. As far as the I.E.M. of the appellant in L.P.A. No. 42 of 2002 i.e. Shrishail Karkhana is concerned, though it is issued on 23rd March, 2002, considering the proximity of its Chairman to that of the Chairman of existing Indira Sahakari Sakhar Karkhana Ltd., on that point itself, he cannot claim a registration. Section 4 of the M.C.S. Act requires the Commissioner to take such steps which will advance the development of co-operative movement. The co-operative movement is not to be used for concentration of power in a few hands and in one family. If the factory of Shrishail Karkhana is allowed to start function, that will be the result, namely, concentration of economic wealth in a few hands.
27. We accordingly allow the appeals and set aside the order of Single Judge and Commissioner and direct the Commissioner of Sugar to consider the seniority of I.E.M. as mentioned above and decide the claims by giving reasons, and permit opening of the Bank Account by the eligible Co-operative Society for the purposes of registration. The decision to be taken preferably within 8 weeks from receipt of this order. Respondent No. 3 will return and refund the amount to those persons from whomsoever they have been collected in view of the consequential cancellation of permission to open Bank Account.
28. As far as L.P.A. No. 30 of 2002 filed by Indira Karkhana is concerned. Mr. Aney on behalf of respondent No. 3 had made a statement that it will amend its bye-laws and delete therefrom the 24 villages listed in Exhibit 'A' to Writ Petition No. 4762 of 2001. In view of this statement, Mr. Bhadrashete does not press the L.P.A. and writ petition and they are disposed of accordingly, though the impugned orders of Commissioner of Sugar and the learned Single Judge stand set aside.
29. All these three appeals are disposed of accordingly. However, there will be no order as to costs.
30. Parties to act on an authenticated copy of this judgment.
31. After this judgment was pronounced and the order was read out, Dr. Chowdhari, learned Counsel appearing for respondent No. 3 seeks stay of this order for a period of 8 weeks. Mr. Oka, learned Counsel appearing for the appellant, opposed this request, but has thereafter left it to the Court to pass appropriate order.
32. Accordingly, we direct that the first hearing by the Commissioner of Sugar, consequent upon this order, will not be held for a period of 8 weeks. We make it clear that the stay granted earlier against respondent No. 3 that respondent No. 3 will not collect any further amount, will continue to operate within this period of 8 weeks.
33. Issuance of certified copy of this judgment and order is expedited.